U.K. online fashion retailer ASOS in early August announced it would establish a $40 million e-commerce fulfillment center outside of Atlanta, capable of holding 10 million items to support its growing U.S. customer base.

What went unannounced is the Lehigh Valley also was wooing the e-commerce giant, but ultimately finished as a bridesmaid for one crucial reason: ASOS didn’t believe it could find enough workers here.

And, just like that, gone was the prize of landing an international prospect — and the 1,600 jobs that would have come with it.

“The shame of it is it’s an issue that there’s not much you can do about,” said Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp. “The issue here with this particular company wasn’t so much skilled workforce as it was sheer volume of workers, number of workers.

“That one … it stung,” he said.

The loss of ASOS highlights what Cunningham called a “real issue” for the Lehigh Valley: a dwindling supply of available workers for the area’s transportation and warehousing sector, particularly in fulfillment. It’s an issue that’s still relatively recent, rearing its head last year and intensifying further in 2017 as the Lehigh Valley continues to cement itself as one of the country’s core distribution hubs, grabbing the attention of companies such as ASOS in the process.

But Cunningham, staffing personnel and others stop short of calling it a shortage. Instead, they see the region’s 5.1 percent jobless rate in August (21,700 unemployed) as a sign of additional capacity — albeit a stubborn part of the labor market to motivate.

If nothing else, however, it’s turned warehouse workers into hot commodities in the Lehigh Valley, forcing companies that were typically heavy on logistics but light on morale to boost base wages, offer benefits and amp up the amenities to attract and retain workers.

Consider it a growing pain for the Lehigh Valley. After all, the area’s transportation and warehousing sector has exploded over the last several years to the point where it employed 27,300 people in August, up nearly 10,000 jobs from just five years ago. Further, the sector was responsible for $1.9 billion of the area’s economic output last year, a 9.5 percent jump from 2015 — making it the fastest-growing sector of the regional economy, according to data crunched and released by LVEDC last month.

Among the reasons the area has been fertile for warehouse development: its proximity to major population centers and ports, its available land and its abundant labor supply, with nearly 40 percent of the Lehigh Valley’s workforce holding a high school diploma or less — a figure that outpaces the national mark.

“But now, we’re hitting the upper end on both available land and available workforce,” Cunningham said. “The trend can’t continue forever, because at some point you’re going to run out of workers in that sector, and you’re going to run out of available land to fulfill the desire of these industrial operations.”

As it is now, he noted, the Lehigh Valley is drawing workers from five or six surrounding counties to help meet the demand. In fact, 91,230 people from neighboring counties filled jobs in the Lehigh Valley in 2015, including 28,922 in the trade, transportation and utilities sector that includes warehousing under its umbrella, according to the most recent inflow/outflow data from the U.S. Census Bureau.

E-commerce hub

The Lehigh Valley’s staffing agencies see the tightening market for warehouse workers firsthand.

“This is the toughest market in terms of recruiting that I’ve seen in 22 years of doing this,” said Susan Larkin, vice president of Allied Personnel Services, which has offices in Allentown and Easton. “It’s a very challenging market.”

Larkin said Allied started to see a dwindling number of available workers for warehouses throughout 2016, which has only intensified this year, especially as seasonal hiring has started earlier and earlier. For example, she said, Allied now begins to feel the seasonal surge at the beginning of the summer, and it’s getting to the point where it’s year-round.

That’s what happens when consumers increasingly trade bricks for clicks. That trend isn’t likely to slow down, with online sales expected to account for 17 percent of all U.S. retail sales by 2022, up from an estimated 12.9 percent this year, according to a recent report from research and advisory firm Forrester, which works with business and technology leaders to develop growth strategies.

Those changing shopping habits also helped change the landscape of the Lehigh Valley, where several e-commerce companies have major operations. Among them: online personal shopping service Stitch Fix has a 500,000-square-foot distribution center in Lower Nazareth Township, online retailer Zulily has an 800,250-square-foot fulfillment center in Bethlehem and online behemoth Amazon.com Inc. has a warehouse complex in Breinigsville and a fulfillment facility in Palmer Township.

Amazon has grown to the point where it’s one of the Lehigh Valley’s largest employers. An Amazon spokesperson said the company employs more than 2,000 full-time associates across two warehouses in Breinigsville and another 1,500 full-time associates in Palmer — and Amazon is just now starting its seasonal ramp-up.

To help worker-hungry companies, such as Amazon, connect with job-seekers in transportation and warehousing, Pennsylvania CareerLink Lehigh Valley in Allentown last year hosted 60 single-employer job fairs with more than 1,000 attendees and two multi-employer job fairs, which attracted about 150 people, according to Nancy Dischinat, executive director of Workforce Board Lehigh Valley.

More recently, Amazon held a multiday job fair at CareerLink, hiring 61 people so far out of a pool of about 250. Similarly, Walmart recently held three job fairs at CareerLink, which lured 216 job-seekers — 100 of whom have been hired to date, Dischinat said.

So now, Dischinat said, the Lehigh Valley is holding its own when it comes to filling warehouse jobs.

“But based on economic growth, there will be a tipping point at some time in the future,” she acknowledged.

Rising wages

Walmart is one company that has had success attracting and retaining warehouse workers in the Lehigh Valley. Across the retailer’s two fulfillment centers in Bethlehem, the company has grown to 2,400 employees and plans to hire hundreds more leading up the holidays, Walmart spokesman Ravi Jariwala said.

While he credited Walmart’s culture as part of the reason the company has found workers in the Lehigh Valley, the money doesn’t hurt, either. Jariwala said the starting pay for a warehouse worker in Bethlehem is $14.75 an hour, with 50-cent increments every six months, meaning a Walmart fulfillment worker in the Lehigh Valley can make $18.25 an hour after a little more than three years with the company.

WALMART / CONTRIBUTED PHOTO

Boxes move along a conveyor belt at Walmart's 1.2-million-square-foot fulfillment center in the Majestic Bethlehem Center, which opened in 2015 and gave the retailer its second fulfillment facility in the Lehigh Valley.

Boxes move along a conveyor belt at Walmart's 1.2-million-square-foot fulfillment center in the Majestic Bethlehem Center, which opened in 2015 and gave the retailer its second fulfillment facility in the Lehigh Valley. (WALMART / CONTRIBUTED PHOTO)

As Walmart’s fulfillment wages indicate, warehousers in the Lehigh Valley can find talent — but they’re going to have to pay well to keep it. For example, Amazon now starts its full-time warehouse associates in the Lehigh Valley at $13.05 to $14.05 an hour, a recent increase it’s been advertising on area billboards, and Stitch Fix this year raised its retail warehouse associate wage to $13.10 an hour.

Finding enough workers was a legitimate concern for Pinnacle Logistics, an aviation cargo warehousing operation, when it opened its facility near Lehigh Valley International Airport this year, according to Paul Henshaw, the company’s vice president of sales. To counter that concern, the company decided to go with a starting wage of $14 an hour.

“That’s where we end up having a good recruitment right off the bat,” said Henshaw, noting Pinnacle already has more than 200 employees at its leased facility.

It doesn’t stop at the money, though. In the competition for workers, warehousers also offer perks such as training stipends, employee discounts — for example, Zulily offers a 20 percent discount to zulily.com — climate-controlled environments and free food and beverages in break rooms.

To remain competitive in the Lehigh Valley, third-party logistics provider NFI Industries has used several strategies, including increasing wages, offering sign-on and referral bonuses during large hiring sprees, and leveraging social media advertising, said Nancy Stefanowicz, the company’s senior vice president of human resources. NFI, which operates nine facilities across the Lehigh Valley and has more than 900 employees here, recently hired more than 150 associates in the area but still has about 100 job openings.

“The Lehigh Valley has seen extensive growth over the years and we are seeing tightening in the market,” Stefanowicz said. “It is a candidate-driven market with demand for similar roles.”

The bottom line: With the boom in development, it’s easier than ever for a worker making $12 an hour in an older warehouse to jump ship to another facility a mile down the road that’s newer and offering a $15 hourly wage.

That’s especially true in certain pockets. Jake Terkanian, who specializes in industrial properties as the first vice president of CBRE in the company’s Wayne, Delaware County, office, said there’s pressure on the labor pool in the Route 100 corridor, in Bethlehem where another 1 million-square-foot warehouse is rising, and along Route 33, among other areas.

So, in an atmosphere where labor has started driving the deals rather than location, Terkanian said, it’s even more crucial that companies do their homework on the Lehigh Valley, gauging an area’s labor pool and performing a drive-time analysis to determine the distance from which they can attract workers. CBRE is even starting to see some developers do this, allocating funds to prepare a labor study that can be used in the marketing materials for a warehouse.

“The people are there,” Terkanian said. “It’s just locating correctly, engaging the market correctly, understanding where the labor pockets are, making sure you’re not underpricing your wages and making sure you’re providing a good working environment.

“Once they get them, they need to keep them,” he said.

It ultimately boils down to each company’s needs, especially since not every large industrial user has a high labor demand. For example, Terkanian pointed to a Georgia-Pacific warehouse outside Shippensburg, Cumberland County, that totals more than 1.4 million square feet but has just 50 workers.

But for warehousers looking for more than 1,000 workers in the Lehigh Valley, like ASOS — which declined to comment for this story -- it might be more of a challenge to find what the company found near Atlanta: mainly, a “deep pool of talent,” the firm’s vice president of logistics said in a news release distributed by Georgia Gov. Nathan Deal to trumpet the economic win.

But, while the Lehigh Valley won’t be the U.S. home of ASOS, maybe the news isn’t all bad.

“You can’t make more people overnight,” Cunningham said. “And maybe that’s OK. If all your folks in a given sector are employed in a growing wage rate, that may be what the region wants.”